George Stephanopoulos interviewed President-elect Barack Obama on ABC's This Week, and Obama addressed the challenges his administration will face when he is sworn in on January 20th.

Obama said fixing the economy for the long-term will require sacrifices from every American, and that the priority for the large stimulus plan he is pushing for is doing what works:

"These are going to be major challenges. And we're going to have to make some tough choices... So what our challenge is going to be is identifying what works and putting more money into that, eliminating things that don't work, and making things that we have more efficient. I'm not suggesting, George, I want to be realistic here, not everything that we talked about during the campaign are we going to be able to do on the pace that we had hoped."

Obama has called for closing Guantanamo as soon as possible, but admitted that it cannot happen immediately, and that it likely wouldn't happen in the first 100 das of his presidency:

"It is more difficult than I think a lot of people realize," the President-elect explained. "Part of the challenge that you have is that you have a bunch of folks that have been detained, many of whom who may be very dangerous who have not been put on trial or have not gone through some adjudication. And some of the evidence against them may be tainted even though it's true. And so how to balance creating a process that adheres to rule of law, habeas corpus, basic principles of Anglo American legal system, by doing it in a way that doesn't result in releasing people who are intent on blowing us up."

Obama did state unequivocally that he will close Guantanamo and has not changed his mind.

With the Gaza conflict still raging, and Israel warning of an escalation in the offensive, Obama defended his reticence to speak out on the matter because, especially in foreign policy, there can only be one president at a time. Obama did, however, stand by his comments about rockets being launched at Israel and the right of that nation to defend itself:

When asked if he would say the same in Israel today, Obama said, "I think that's a basic principle of any country is that they've got to protect their citizens."

Comparing his approach to the Middle East to that of previous administrations, Obama suggested that he will not be making a clean break from the Bush policy. "I think that if you look not just at the Bush administration, but also what happened under the Clinton administration, you are seeing the general outlines of an approach."

The full transcript of the interview, provided by ABC News, is below.

GEORGE STEPHANOPOULOS: Hello, again. In nine days he will be president of the United States. This morning Barack Obama is our exclusive headliner.Welcome back to THIS WEEK.

BARACK OBAMA, PRESIDENT-ELECT: Thank you, George.

STEPHANOPOULOS: Does it feel like you're president already?

OBAMA: No.

STEPHANOPOULOS: This is on quite a pace.

OBAMA: All of those bells and whistles -- as much we are working hard in the next couple of weeks, I think that when you're actually in the Oval Office making decisions, I think that's going to be different.

STEPHANOPOULOS: You know, we asked our viewers what they wanted to hear from you, and we got hundreds of pages of questions, thousands of questions, almost all about the economy. And it's clear there's a lot of pain out there, a lot of fear. And if I could sum up the questions, it would be very simple, can you fix this?

OBAMA: I think we can fix this. But it's going to take some time. It's not going to happen overnight. And what we tried to do this week was, first of all, explain where we are in the economy. That the jobs numbers this week were terrible. That means we've lost 2.5 million last year. That's the most since World War II. You've got another 3.4 million people who have gone from full-time work to part-time work, or want full-time work. So the underemployment rate is extremely high. And, you know, whether it's retail sales, manufacturing, all of the indicators show that we are in the worst recession since the Great Depression.

And it's going to take some time to fix it. But what we tried to do was put forward a plan that says let's act boldly, let's act swiftly. Let's not only provide a jumpstart to the economy and immediately or save 3 million jobs, but let's also put a down payment on some of the structural problems that we have in our economy.

STEPHANOPOULOS: It has been pretty well-received in the Congress. But you're getting some pushback as well, especially from Senate Democrats on the tax cut portions. Senator Tom Harkin said this is trickle down economics all over again. They're focused especially on the business taxes.

Do you really believe those business tax cuts are going to work to create jobs? Or do you put them in so you could get Republican votes?

OBAMA: Well, let's look at the package as a whole, the bulk of the package is direct government spending. And here are a few things we're going to do. We're going to alternative energy production. We are going

weatherize 2 million homes. We are going to create a much more efficient energy system.

And that's going to have enormous ramifications for the economy as a whole down the line. I think we can create a new green economy. And that's going to be one of the keys to the 21st Century. Health care, which is a drain on our economy, both families and businesses, we're going to make investments in information technology, update our systems work, reduce medical error, that's going to save people money.

Education, we want to create a classroom for the 21st Century for every child, as well as community colleges and public universities. So we're making a series of investments that point to the future as well as just dealing with rebuilding our roads, bridges, et cetera.

Now there is no doubt that that probably gives you the most bang for the buck in terms of stimulus, in terms of getting the economy started, putting people back to work. But there are only so many projects that you can do quickly of that sort.

And so then the question becomes, do tax cuts also provide a stimulus? Do they also help? And they may not help as much as some of the direct spending projects do, but they still provide a stimulus, especially if they are targeted towards people who are really in need.

And there are a lot of families hurting out there. So what we've done is design the bulk of our tax cuts&

STEPHANOPOULOS: But you might give up on some of the business tax cuts?

OBAMA: Well, you know, there are a range of different business tax cuts that we proposed, that we looked at. Some of them, for example, accelerating the depreciation, accelerating the losses that can be

written off by businesses, it turns out those are short-term, temporary measures that actually can have an impact.

But our general philosophy, and I said this yesterday when I was asked at a press conference, is we don't have pride of authorship. There are a couple of basic principles that I laid out. We've got to move quickly. We've got to make sure that any investments that we make have good long-term benefits for the economy, not just short-term.

We can't set up a situation where we're adding to the structural deficit over the long-term. We can't have waste and abuse in it. We can't have earmarks in it.

STEPHANOPOULOS: Well, let's look at some&

OBAMA: But -- just to finish the point, if people have better ideas on certain provisions, if they say, you know, this is going to work better than that, then we welcome that. And so we're going to have a collaborative, consultative process with Congress over the next few days.

But what we can't do is get involved in the typical partisan wrangling or pet project, you know, bartering that takes place.

STEPHANOPOULOS: Well, that's what I wanted to ask you about, because like one of the signature proposals already is this Museum of Organized Crime out in Las Vegas. I had Mitch McConnell out on the show last week and he ridiculed it, saying that, you know, this is an example of the kind of pork we don't want.

Yet its advocates say, wait a second, it's a construction project, it's ready to go, it's going to create jobs. Is that the kind of project that you want to fund or not?

OBAMA: Well, let's be clear, that was a project that was proposed as part of the mayors' project. The country's mayors put together -- here are a range of projects we can do, we didn't include that.

STEPHANOPOULOS: But would you want to fund it or not?

OBAMA: Well, I think that what we have to do is evaluate whether or not these are projects that, as I said, are going to provide long-term benefits to the economy. You know, I would prefer spending money on things like making sure that all federal buildings are energy efficient so the taxpayers are saving money over the long-term.

I want to make sure that on health care we are creating the infrastructure that can make our health care more -- system more efficient. So, you know, we want to spend the money wisely. We want to spend it prudently.

In a package of this magnitude, will there end up being certain projects that potentially don't meet that criteria of helping on health care, energy, or education? Certainly.

But what we don't want is this thing to be a Christmas tree loaded up with a whole bunch of pet projects that people have for their local communities.

STEPHANOPOULOS: I've heard that -- and your meetings on Capitol Hill, the one thing you've been most focused on is get this done now.

OBAMA: Yes.

STEPHANOPOULOS: It has to be done...

OBAMA: Right.

STEPHANOPOULOS: & Presidents Day weekend.

OBAMA: Right.

STEPHANOPOULOS: What happens if it's not?

OBAMA: Well, you know, then Congress was going to hear from me. And I was pleased to hear Nancy Pelosi say that if we don't get it done by the Presidents Day recess, we won't have a Presidents Day recess.

STEPHANOPOULOS: But what's your fear?

OBAMA: Well, the concern is that in a non-emergency situation, Congress exercises all sorts of prerogatives. They've got all sorts of procedures. Everybody wants to be heard. And I'm respectful of that. I'm coming from the United States Senate. I understand why that is important.

And, you know, one of the things that we're trying to set a tone of is that, you know, Congress is a co-equal branch of government. We're not trying to jam anything down people's throats.

Here's what we know though, that the sooner a recovery and reinvestment package is in place, the sooner we can start turning the economy around. We can't afford three, four, five, six more months where we're losing half a million jobs per month.

And the estimates are that if we don't do anything, we could see 4 million jobs lost this year.

STEPHANOPOULOS: Another part of that is the financial rescue package.

OBAMA: Right.

STEPHANOPOULOS: Do you want President Bush to request that second $350 billion? And how do you want that spent differently from the first?

OBAMA: Well, I started off with the premise, when this crisis first arose, that we have to keep our financial system stable, and we have to maintain the flow of credit to businesses and families.

That's as important as what's happening in terms of consumer spending or business investment, because if companies can't make payroll, people get laid off. If a guy can't borrow for a car loan, that affects not only him, but the car dealer and the car manufacturer.

So keeping flow of credit is critical. And we had to do something last fall. I, like many, are disappointed with how the whole TARP process has unfolded. There hasn't been enough oversight. We found out this week in a report that we are not tracking where this money is going.

I think that when you look at how we have handled the home foreclosure situation and whether we've done enough in terms of helping families on the ground who may have lost their homes because they lost their jobs or because they got sick, we haven't done enough there. So&

STEPHANOPOULOS: Congressman Frank says he wants $50 billion of the new money to go just to that.

OBAMA: Well, so here's what we have done. What I've done is asked my team to come together, come up with a set of principles around how we are going to maintain transparency, what are we going to do in terms of housing, how are we going to target small businesses that are under an enormous business crunch?

Let's lay out very specifically some of the things that we are going to do with the next $350 billion of money. And I think that we can gain -- regain the confidence of both Congress and the American people that this is not just money that is being given to banks without any strings attached and nobody knows what happens, but rather that it is targeted very specifically at getting credit flowing again to businesses and families.

STEPHANOPOULOS: If both of these packages go through, that's more than a trillion dollars in spending in your first couple of months in office.

OBAMA: Right.

STEPHANOPOULOS: When you look at the array of things you want to do, as president, something is going to have to give.

OBAMA: Right.

STEPHANOPOULOS: Which of your ambitions, which of your campaign promises will you have to scale back on because of all of this?

OBAMA: Well, we are going to be presenting a budget in February. And as we learned this week, we are inheriting over a trillion dollar deficit. Unheard of in recent history and&

STEPHANOPOULOS: Eight percent of gross domestic product.

OBAMA: Exactly. So one of the things that I've said is -- and I've said this to my economic team, we are going to have to make some tough choices under my watch to ensure that on the medium term and the long term we're starting to bend the curve where we are getting the deficit under control.

They are going to report back to me in the next month to give me a plan. Now as difficult as it is to spend money wisely, it's going to be even tougher to make some of the adjustments that are needed to get the deficit under control.

STEPHANOPOULOS: But you're going to face some real hard choices. You brought up health care a couple of times&

OBAMA: Absolutely.

STEPHANOPOULOS: & in this interview already. During the campaign you said you would pay for health care by repealing the Bush tax cuts on the wealthy. According to the CBO, you're going to get a $1.2 trillion to $1.8 trillion deficit even if all of the tax cuts are repealed.

OBAMA: Right.

STEPHANOPOULOS: So how do you pay for health care?

OBAMA: Well, you know, these are going to be major challenges. And we're going to have to make some tough choices. Now what I've done is indicated to my team that we've got to eliminate programs that don't work.

And I'll give you an example in the health care area. We are spending a lot of money subsidizing the insurance companies around something called Medicare Advantage, a program that gives them subsidies to accept Medicare recipients but doesn't necessarily make people on Medicare healthier.

And if we eliminate that and other programs, we can potentially save $200 billion out of the health care system that we're currently spending and take that money and use it in ways that are actually going to make people healthier and improve quality.

So what our challenge is going to be is identifying what works and putting more money into that, eliminating things that don't work, and making things that we have more efficient.

I'm not suggesting, George, I want to be realistic here, not everything that we talked about during the campaign are we going to be able to do on the pace that we had hoped.

STEPHANOPOULOS: Let me press you on this, at the end of the day, are you really talking about over the course of your presidency some kind of a grand bargain? That you have tax reform, health care reform, entitlement reform, including Social Security and Medicare where everybody in the country is going to have to sacrifice something, accept change for the greater good?

OBAMA: Yes.

STEPHANOPOULOS: And when will that get done?

OBAMA: Well, the -- right now I'm focused on a pretty heavy lift, which is making sure that we get that reinvestment and recovery package in place. But what you describe is exactly what we're going to have to do.

What we have to do is to take a look at our structural deficit, how are we paying for government, what are we getting for it, and how do we make the system more efficient?

STEPHANOPOULOS: And eventually sacrifice from everyone.

OBAMA: Everybody is going to have to give. Everybody is going to have to have some skin in the game.

STEPHANOPOULOS: Let me move on to national security and foreign policy. We're now in the second week of the conflict in Gaza between Israel and the Palestinians. I know you've been reluctant to speak out too much on this. Let me show everyone what you said when you were in Israel last July.

(BEGIN VIDEO CLIP)

OBAMA: I don't think any country would find it acceptable to have missiles raining down on the heads of their citizens. If somebody was sending rockets into my house where my two daughters sleep at night, I'm going to do everything in my power to stop that. I would expect Israelis to do the same thing.

(END VIDEO CLIP)

STEPHANOPOULOS: Would you say that in Israel today?

OBAMA: I think that's a basic principle of any country is that they've got to protect their citizens. And so what I've said is that given the delicacy of the situation, the one area where the principle of one president at a time has to hold is when it comes to foreign policy.

We cannot have two administrations at the same time simultaneously sending signals in a volatile situation. But what I am doing right now is putting together the team so that on January 20th, starting on day one, we have the best possible people who are going to be immediately engaged in the Middle East peace process as a whole.

That are going to be engaging with all of the actors there. That will work to create a strategic approach that ensures that both Israelis and Palestinians can meet their aspirations.

STEPHANOPOULOS: But as you know, in much of the Arab world, your silence -- your relative silence has been interpreted as callousness. And we also had a viewer question on this, Marin Guerrero of Riverside, California, asks you: "Why is Obama remaining silent on the Gaza crisis when so many innocent people are being killed?"

OBAMA: Well, look, I have said -- and I think I said this a couple of days back, that when you see civilians, whether Palestinian or Israeli, harmed, under hardship, it's heartbreaking. And obviously what that does is it makes me much more determined to try to break a deadlock that has gone on for decades now.

STEPHANOPOULOS: But more broadly, will your policy in the Middle East, will it be building on the Bush policy or a clean break?

OBAMA: Well, you know, I think that if you look not just at the Bush administration, but also what happened under the Clinton administration, you are seeing the general outlines of an approach.

And I think that players in the region understand the compromises that are going to need to be made. But the politics of it are hard. And the reason it's so important for the United States to be engaged and involved immediately, not waiting until the end of their term, is because working through the politics of this requires a third party that everybody has confidence, wants to see a fair and just outcome.

And I think that an Obama administration, if we do it right, can provide that kind of (INAUDIBLE).

STEPHANOPOULOS: Former Defense Secretary Bill Perry said this week at a conference that you will almost certain face, almost certainly face a conflict, a crisis with Iran in your first year in office.

Based on what you've learned, do you agree with that analysis and are you ready for it?

OBAMA: Well, I think that Iran is going to be one of our biggest challenges. And as I said during the campaign, you know, we have a situation in which not only is Iran exporting terrorism through Hamas, through Hezbollah, but they are pursuing a nuclear weapon that could potentially trigger a nuclear arms race in the Middle East.

STEPHANOPOULOS: And you have to do something about it in your first year.

OBAMA: And we are going to have to take a new approach. And I've outlined my belief that engagement is the place to start. That the international community is going to be taking cues from us in how we want to approach Iran.

And I think that sending a signal that we respect the aspirations of the Iranian people, but that we also have certain expectations in terms of how a international actor behaves, is&

(CROSSTALK)

STEPHANOPOULOS: But a new emphasis on respect.

OBAMA: Well, I think a new emphasis on respect and a new emphasis on being willing to talk, but also a clarity about what our bottom lines are. And we are in preparations for that. We anticipate that we're going to have to move swiftly in that area.

STEPHANOPOULOS: Let me ask you about homeland security. You haven't talked too much about it. This week, President Bush's homeland security adviser, Ken Wainstein was talking about the Mumbai attacks.

And he said: "You could envision it happening in any American city, and it's chilling when you think about it." And, you know, you've been getting the president's daily brief every single day, do you agree with that?

OBAMA: I think that homeland security always has to be our number one priority. When I set up the hierarchy of things that I've got to do, my number one priority every single day that I wake up is how do I make sure that the American people are safe. We've got an outstanding person in Janet Napolitano who's going to be heading up our homeland security department. She is already in deep consultation with the other members of my national security team and we are going to have to stay vigilant and that's something that doesn't change from administration to administration. When you see what happened in Mumbai that potentially points to a new strategy, not simply suicide bombings but you have commanders taking over

STEPHANOPOULOS: (INAUDIBLE)

OBAMA: I think that the dangers are always there and I think you have to anticipate that having seen the mayhem that was created in Mumbai that there are going to be potential copycats or other terrorist organizations that think this is something they can replicate. And so we're going to have to be vigilant in terms of our intelligence, we're going to have to make sure that we are more effective in terms of anticipating some of these issues and we've got to continue to put pressure on al Qaeda, which is our major target, that's something that I talked about extensively during the campaign. That has to be one of our primary areas of focus when it comes to our international security.

STEPHANOPOULOS: So based on what you've learned during all these intelligence briefings, are we safer or more at risk than you believed during the campaign?

OBAMA: Well George you know I can't say what the --

STEPHANOPOULOS: Without giving me any confidential information, just generally.

OBAMA: I think that we have made progress in certain areas but those dangers are still there. And those dangers are not going to immediately go away because we're not talking about conventional armies where we have very clear measures of what their capacity is. We know exactly what they're planning, where they're positioned. If you have a small group of people in today's world with today's technology who are intent on doing harm and are willing to die, that is something that's always going to be a challenge.

STEPHANOPOULOS: Your smile goaded me into another question. I was thinking about Harry Truman. You know when he took office he didn't even know about the Manhattan project, found out about it after he was president. Have you been shocked by anything you've learned?

OBAMA: Most of what I've learned is -- are things that I've anticipated, partly because I was in the senate and although I wasn't on the intelligence committee we would get top secret briefings. So there hasn't been something that was eye popping. But you know the situation still requires vigilance.

STEPHANOPOULOS: Vice President Cheney has been giving a series of exit interviews and he told Mark Nolan(ph) of CBS that the Bush counterterrorism policies have definitely made the United States safer. And he added this piece of advice for you.

(BEGIN AUDIO CLIP)

DICK CHENEY: Before you start to implement your campaign rhetoric you need to sit down and find out precisely what it is we did and how we did it. Because it is going to be vital to keeping the nation safe and secure in the years ahead and it would be a tragedy if they threw over those policies simply because they've campaigned against them.

(END OF AUDIO CLIP)

STEPHANOPOULOS: Are you going to take it?

OBAMA: I think that was pretty good advice, which is I should know what's going on before we make judgments and that we shouldn't be making judgments on the basis of incomplete information or campaign rhetoric. So, I've got no quibble with that particular quote. I think if Vice President Cheney were here he and I would have some significant disagreements on some things that we know happened.

STEPHANOPOULOS: You would say for example?

OBAMA: For example, Vice President Cheney I think continues to defend what he calls extraordinary measures or procedures when it comes to interrogations and from my view waterboarding is torture. I have said that under my administration we will not torture.

STEPHANOPOULOS: How about them taking that to the next step. Right now the CIA has a special program, would you require that that program -- basically every government interrogation program be under the same standard, be in accordance with the army field manual?

OBAMA: My general view is that our United States military is under fire and has huge stakes in getting good intelligence. And if our top army commanders feel comfortable with interrogation techniques that are squarely within the boundaries of rule of law, our constitution and international standards, then those are things that we should be able to (INAUDIBLE)

STEPHANOPOULOS: So no more special CIA program?

OBAMA: I'm not going to lay out a particular program because again, I thought that Dick Cheney's advice was good, which is let's make sure we know everything that's being done. But the interesting thing George was that during the campaign, although John McCain and I had a lot of differences on a lot of issues, this is one where we didn't have a difference, which is that it is possible for us to keep the American people safe while still adhering to our core values and ideals and that's what I intend to carry forward in my administration.

STEPHANOPOULOS: You also agreed on Guantanamo when you say you want to shut it down. You say you're still going to shut it down. Is it turning out to be harder than you expected, will you get that done in the first 100 days?

OBAMA: It is more difficult than I think a lot of people realize and we are going to get it done but part of the challenge that you have is that you have a bunch of folks that have been detained, many of whom who may be very dangerous who have not been put on trial or have not gone through some adjudication. And some of the evidence against them may be tainted even though it's true. And so how to balance creating a process that adheres to rule of law, habeas corpus, basic principles of Anglo American legal system, by doing it in a way that doesn't result in releasing people who are intent on blowing us up.

STEPHANOPOULOS: So not necessarily first 100 days.

OBAMA: That's a challenge. I think it's going to take some time and our legal teams are working in consultation with our national security apparatus as we speak to help design exactly what we need to do. But I don't want to be ambiguous about this. We are going to close Guantanamo and we are going to make sure that the procedures we set up are ones that abide by our constitution. That is not only the right thing to do but it actually has to be part of our broader national security strategy because we will send a message to the world that we are serious about our values.

STEPHANOPOULOS: The most popular question on your own website is related to this. On change.gov it comes from Bob Fertik of New York City and he asks, "Will you appoint a special prosecutor ideally Patrick Fitzgerald to independently investigate the greatest crimes of the Bush administration, including torture and warrantless wiretapping."

OBAMA: We're still evaluating how we're going to approach the whole issue of interrogations, detentions, and so forth. And obviously we're going to be looking at past practices and I don't believe that anybody is above the law. On the other hand I also have a belief that we need to look forward as opposed to looking backwards. And part of my job is to make sure that for example at the CIA, you've got extraordinarily talented people who are working very hard to keep Americans safe. I don't want them to suddenly feel like they've got to spend all their time looking over their shoulders and lawyering (ph).

OBAMA: We have not made final decisions, but my instinct is for us to focus on how do we make sure that moving forward we are doing the right thing. That doesn't mean that if somebody has blatantly broken the law, that they are above the law. But my orientation's going to be to move forward.

STEPHANOPOULOS: So, let me just press that one more time. You're not ruling out prosecution, but will you tell your Justice Department to investigate these cases and follow the evidence wherever it leads?

OBAMA: What I -- I think my general view when it comes to my attorney general is he is the people's lawyer. Eric Holder's been nominated. His job is to uphold the Constitution and look after the interests of the American people, not to be swayed by my day-to-day politics. So, ultimately, he's going to be making some calls, but my general belief is that when it comes to national security, what we have to focus on is getting things right in the future, as opposed looking at what we got wrong in the past.

STEPHANOPOULOS: You know, you've mentioned Eric Holder. He's coming under some fire on Capitol Hill by the ranking Republican Senate Judiciary Committee Arlen Specter and some others who are worried about just that, that he's not going to be independent. Are you confident he's going to be confirmed?

OBAMA: Yes.

STEPHANOPOULOS: And are you worried at all, troubled at all by the questions that are being asked about his independence, also questions about his involvement in the Marc Rich case?

OBAMA: Oh, I think most of the criticism has revolved around the Marc Rich pardon and he has publicly acknowledged that it was a mistake. George, as you know, if the criteria for somebody being confirmed on a cabinet or being elected president was that they've never made a mistake &

STEPHANOPOULOS: Nobody would get in.

OBAMA: Nobody would get in. So, you know, here's somebody who's publicly taken responsibility, he said he dropped the ball on that one. Beyond that, though, everybody will acknowledge that you can't find a guy who's more qualified. He was second at the Justice Department, has been a prosecutor, has been a judge, and with respect to the issues of independence, he locked up the most powerful Democrat on the Hill, Dan Rostenkowski. So, I think this is a man of unimpeachable integrity, I have every confidence that he will be confirmed.

STEPHANOPOULOS: Let me ask you about the inaugural. I know you've been working on your inaugural address. You say you've been reading a lot of Lincoln. Is there anything else that you've come across as you've been preparing the speech that's been a particular inspiration to you?

OBAMA: Well, you know, I have been reading Lincoln. I'm not sure whether that's been wise because every time you read &

STEPHANOPOULOS: High bar.

OBAMA: Every time you read that second inaugural, you start getting intimidated, especially because it's really short. You know, there's a genius to Lincoln that is not going to be matched. People then point to Kennedy's inauguration speech. Sorenson and Kennedy together did an extraordinary job. Some of the others are not as inspiring.

STEPHANOPOULOS: To say the least.

OBAMA: And so, I think that the main task for me in an inauguration speech, and I think this is true for my presidency generally, is to try to capture as best I can the moment that we are in it. I mean, I think that when you have a successful presidential speech of any sort, it's because that president is able to say -- is able to put their finger on here's the moment we're in. This is the crossroad that we're at. And then to project confidence that if we take the right measures that we can once again be that country, that beacon for the world.

And so, my focus is to try to be able to describe in simple, plain terms what are the challenges we face, but then also to let people know I have every intention of working with the American people so that we meet those challenges.

STEPHANOPOULOS: I just have a couple more questions.

OBAMA: Sure.

STEPHANOPOULOS: You've been without a worship community now for about a year. Do you miss it?

OBAMA: I do and it's been a difficult time. Now, I've got a wonderful community of people who are praying for me every day, and they call me up and -- you know, but it's not the same as going to church and the choir's going and you get a good sermon.

STEPHANOPOULOS: So, do you have a church here in Washington?

OBAMA: Not yet. And so, one of the things that Michelle and I will be doing is probably visiting some churches and seeing what's comfortable. It is tougher as president. You know, this is not just an issue of going to church, it's an issue of going anywhere. You don't want to subject your fellow church members, the rest of the congregation, to being magged every time you go to church. And so, we're going to try to be balancing, not being disruptive to the city, but also saying we want to be part of Washington D.C.

But one of the things that I don't like historically about Washington is the way that you've got one part of Washington, which is a company town, all about government, and is generally pretty prosperous. And then, you've got another half of D.C. that is going through enormous challenges. I want to see if we can bring those two Washington D.C.s together.

STEPHANOPOULOS: Also, your girls started school this week. How'd the first week go?

OBAMA: They seemed to thrive. I'm trying to figure out why it is that they don't seemed to be fazed by anything. People think -- you know, folks think I'm cool, they are a lot cooler than I am. They just don't seem to be intimidated.

STEPHANOPOULOS: Well, I got to tell you, you know, they're out touring the museum right now, I heard they were taken straight to the first dog exhibit and while you were getting made up, they went into the control room and played director and producer. And they actually gave me a question they want me to ask you. You know exactly what it's going to be.

OBAMA: Uh-oh. Go ahead.

STEPHANOPOULOS: What kind of a dog are we getting and when are we getting it?

OBAMA: The -- they seem to have narrowed it down to a labradoodle or a Portuguese water hound.

STEPHANOPOULOS: A medium sized.

OBAMA: Medium sized dog, and so, we're now going to start looking at shelters to see when one of those dogs might come up.

STEPHANOPOULOS: So, you're closing in on it?

OBAMA: We're closing in on it. This has been tougher than finding a commerce secretary.

STEPHANOPOULOS: Thank you very much for your time today and best of luck.

OBAMA: Appreciate it. Thank you, George.

STEPHANOPOULOS: The round table is next with George Will, Newt Gingrich, Peggy Noonan and Tom Friedman.